May 26, 2021

Tech Funding Sources for State Governments

Normally, your state government relies on funding from income tax and sales tax revenue. However, amid the pandemic, traditional funding channels have not been as reliable, so new funding sources are available to help your state recoup lost revenue and mount an effective COVID-19 response and recovery.

The influx of money from these new funding sources can not only help you fund public programs for employment, education, and healthcare, but also upgrade the technology you rely on to efficiently manage your workforce and operate your state government.

State Government Funding Challenges

There are many complexities to operating a state government, as you must balance rising expenses with tax revenue and properly fund a range of agencies and public programs across the state. However, due to the pandemic, your state budget may have struggled to meet these crucial needs.

According to research by Pew Charitable Trusts, annual tax revenue declined in all but seven U.S. states in 2020, and many state governments have either had to cut back on spending for critical programs or dip into their “rainy day” funds. Unfortunately, the pandemic has proven to be a much longer “rainy day” than anyone anticipated, resulting in additional federal stimulus packages to help states recover.

Although the additional stimulus money from recent government legislation provides much-needed assistance, state governments must still carefully plan spending and determine how funds should be allocated to specific programs. There are some restrictions on how you can use funds from different sources, but with a thoughtful approach, you can dedicate funds to the areas in which they are needed most.

Available Tech Funding for State Governments

The latest stimulus packages have provided funding for states to avoid layoffs, improve pandemic response, and help hard-hit communities. They can also fund investments in technology that will support government operations now and into the future. Available funding sources include the following:

Coronavirus Aid, Relief, and Economic Security (CARES) Act
The CARES Act of 2020 provided $150 billion in direct assistance for state, territorial and tribal governments. Under the CARES Act, each state received a minimum allocation of $1.25 billion to cover expenses related to COVID-19. The CARES Act also provided some flexibility in how states could allocate funds. As reported by the National Conference of State Legislatures (NCSL), some states have used the money to support workforce development and the addition of upgraded technology.

Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA)
The CRRSAA became effective in Dec. 2020, and was the second major stimulus package intended to help states manage their COVID-19 responses and recovery, providing $9.6 billion in federal funding for states and territories. Most of the CRRSAA funding is intended to support state education, but up to 10 percent of funds may be used for state emergency needs and administration expenses. This includes supporting state emergency responders, and state police departments could benefit from technology that makes it easier to manage scheduling and deploy department resources more efficiently.

American Rescue Plan Act (ARPA)
The third pandemic-related stimulus package, passed in March 2021, provides direct payments to states. The American Rescue Plan Act provides $1.9 trillion to businesses, individuals, and governments, with $195.3 billion allocated to the state fiscal recovery fund. According to the U.S. Treasury, states can use ARPA funds for any of the following purposes:

  • Public health expenditures and pandemic response
  • Public sector revenue replacement
  • Premium pay for essential workers
  • Investments in water, sewage, and broadband infrastructure

ARPA funding can potentially cover technology expenditures related to getting state employees back to on-site work. For example, workforce management solutions that track employee work hours and time off can support employee productivity and the smooth operation of state government offices.

Other Federal Grants
Before the pandemic, the federal government regularly provided support to states through individual grants. For example, in 2019, the federal government distributed $721 billion in grants to state and local governments. Though many of these grants are earmarked for specific purposes, some grants offer flexibility in how funds can be spent. Details about specific grants can be found through sites such as

Improve State Government Operational Efficiency

Although your state government may have struggled to make ends meet during the pandemic, the recent rounds of stimulus funding offer a boost to cover essential services. These funding sources can also support investment in your workforce through technology, such as workforce management solutions that enable better tracking of labor costs and more efficient scheduling of staff across locations throughout your state. Learn more about how TCP solutions support smooth and efficient government operations.